Internet to contribute up to 3.3% to GDP by 2015

Updated: Thursday, December 20, 2012, 13:04 [IST]

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New Delhi, Dec 20: Internet services and devices industry has potential to increase its contribution to up to 3.3 per cent to India's gross domestic product by 2015, a report by McKinsey & Company said today.

"The Internet currently contributes a modest 1.6 per cent to India's GDP in line with most aspiring countries. This could grow to 2.8-3.3 per cent by 2015, if India achieves its potential for growth in the number of Internet users and Internet technology related consumption and investment over this period," it said.

This would increase Internet's contribution to GDP from $30 billion now to nearly $100 billion in 2015.

At present, India's information and communication technology (ICT) exports are the most significant component of the Internet's impact on GDP but private consumption and investment from private and public sector have greater potential to grow in the future, the report said.

India with a user base of 120 million is the world's third largest Internet market and is poised to have up to 370 million users in 2015.

China has the largest Internet user base in the world with 480 million users followed by the US with 245 million users as of 2011. By 2015, China is expected to have 583 million users while the US is expected to have 279 million users.

The global Internet user base is expected to grow from 2,300 million users in 2011 to 2,662 million by 2015, the McKinsey & Company said in the report.

"Given current downward trends in the cost of internet access and mobile devices, India is on the verge of an Internet boom. India is likely to have the second largest user base in the world and largest in terms of incremental growth," it said.

The report, however, added that the impact if Internet in India is constrained by the current Internet infrastructure.

"While India scores well on availability of human and financial capital, it rates poorly on Internet infrastructure, Internet engagement, e-commerce platform, ease of Internet Entrepreneurship and the impact of e-governance," it said.

It added that though the internet ecosystem is becoming more vibrant, the benefits have been relatively concentrated.

India can achieve broad-based Internet impact by aiming for digital inclusion of nearly 40 per cent of its population to reach a user base of 500 million by 2015, rather than the likely target of 330-370 million, the report said.